Equinix: Leading from the front
19 July 2019 | Jason Mcgee-Abe
Equinix has just announced record revenues, expanded its cloud exchange fabric, and disclosed its $2 billion plans to open new IBX data centres. Jason McGee-Abe spoke to Charles Meyers, CEO and president, to find out the secret behind the company’s competitive edge.
This interview started rather differently than most as I was greeted on arrival by my eldest brother. I meet Meyers in the London boardroom of Equinix’s PR firm, APCO Worldwide, which incidentally happens to be where my brother works. After meeting the APCO team, I head into the boardroom.
Meyers stepped up to the top role in September 2018 and has an impressive CV at Equinix. After speaking with him, he clearly knows the business inside out. He has experience in a range of operating roles at Equinix, having been president of the Americas, COO, and gaining a global perspective in the strategy and product arena, which included scaling up the hyperscale infrastructure team (HIT). All of this has given the CEO a truly holistic view of all of Equinix’s functions and the business is clearly thriving after announcing an increase in quarterly revenues of 12% year-over-year to $1.363 billion.
“We’re super excited about the HIT initiative. It’s headed by the former CTO of Digital Realty, Jim Smith, he spent several years at Microsoft as a primary developer of their hyperscale cloud capacity. He brings a unique perspective and has built up a great team,” says Meyers. Equinix is in the latter stages of formalising a joint venture, which will essentially help to fund future hyperscale opportunities.
“We have narrowed it down to a handful of targeted financial partners and we should have something to announce in the coming months,” he explains. “That strategy means that we can be more aggressive in the hyperscale capacity arena without straining our balance sheet by using third-party capital.”
In Equinix’s Q1 2019 earnings call, it was disclosed that the company will spend nearly $2 billion to open 12 new international business exchange (IBX) data centres and expand 23 existing IBX data centres in 2019. It operates 202 IBXs in total. Interconnection revenues continued to outpace colocation revenues in Q1 with total interconnections increasing to greater than 341,000.
Another notable development includes the Equinix Cloud Exchange Fabric (ECX Fabric) expanding its connectivity service to now support connection between all of its 37 ECX Fabric markets, located across five global continents.
Meyers continues to see M&A as one key tool in the company’s arsenal and “we won’t be shy to use M&A under the right circumstances if we feel it’s an appropriate strategic way to extend our platform”. The good thing about being the market-leader is that if someone is looking to sell their facilities or company they typically pitch Equinix but Meyers warns that it has to be fairly priced! “I will say that current private market valuations for data centre assets are robust to say the least but we’ll be appropriately disciplined to what we think are fairly priced assets,” he says.
In terms of targeting and extending the platform geographically a number of markets are on the target list for Equinix. “I’ve talked about a number of markets where we see gaps in the platform that we would like to fill over time,” the CEO discloses. “India is a market our customers have wanted us to be in for some time. Current customers are looking to extend their presence in markets like India.”
Meyers says he would like Equinix to be in the Indian marketplace within three years. Another strategic area to capitalise on is Africa. “We do not have a presence on the African continent and over time, it’s something that we strategically will absolutely want to do,” he adds. “We’ll continue to monitor that situation over time and be active in that space if and when that’s appropriate.” The CEO would also like to see Equinix enter the Mexician market and expand its Canadian presence.
An interesting area of focus for Equinix resides in the subsea space. Not with actual cable infrastructure but with landing stations. “We estimate that about 35 of our data centres today are particularly well-suited to subsea landing station-type opportunities,” he reveals. “Where appropriate we’ll look at adding to that mix and there are certainly markets that Equinix sees subsea landing stations as key.”
“We’ve won opportunities on 25 subsea cable projects over the last few years and are tracking 50 opportunities in the subsea space at present. Inter-continental traffic patterns are staggering and it speaks to the globalisation of the economy. Equinix’s relevance with its geographical reach and scope of our digital ecosystems.”
Platform Equinix 2.0
“Platform Equinix supports the digital transformation agenda of our customers. People view, and use us, as a global platform,” says Meyers, as he explains the shape of the digital ecosystem today. “In fact, 86% of our revenues come from customers who do business with us in more than one metro. We’re not your traditional local provider of hosting and colocation. That’s not our business. We provide interconnected digital infrastructure on a global basis.”
“We’re continuing to see the underlying drivers of the business continue to be exceptionally strong,” Meyers tells me, adding that he sees a number of other catalysts on the horizon for even more opportunities Equinix can capitalise on. The CEO looks at customers’ digital transformation agendas in different layers. One is the core data centre layer, which “we’ll continue to invest around $2 billion a year to add capacity over time”.
Another is the interconnection level, which is “our core differentiation or secret sauce of the business” whether its internet exchange, traditional cross-connects or now increasingly the cloud exchange fabric. “This is a major driver of the business and people using us as a way to integrate their private infrastructure with cloud and with network resources,” he tells me. “This evolving edge services play and network, connectivity, and data-related services continue to be interesting for us.” The next phase in the evolution of
Platform Equinix has seen the unveiling of Network Edge services, a new product innovation enabling companies to modernise networks virtually, within minutes, by deploying network functions virtualisation (NFV) from multiple vendors to connect their digital supply chains at Equinix.
“We introduced our smart keys service, which is a neutral third party encryption capability to support digital commerce applications and we have a service in pilot now, which is a NFV service that will allow people to purchase and assemble virtualised network functions into networking solutions on top of Platform Equinix,” I’m told.
“Those areas of opportunity in terms of edge data, edge networking, and edge compute are all significant new opportunities for the business to grow in the years ahead.”
However, Meyers warns: “You have to be careful when you’re talking about edge as it means different things to different people.” When Equinix talks about the edge, it’s typically referring to the current digital edge or the interconnected edge where private infrastructure is interfacing with the rest of the digital ecosystem.
Edge data services are clearly helping to boost business for Equinix and represents a big opportunity. “The edge will continue to evolve, in terms of where does compute and storage need to live in order to accomplish the customer use cases that are relevant,” the CEO says. “We’ll definitely see a further expansion of the edge.”
Business is thriving at Equinix under Meyers’ leadership but how does he spend his spare time, if he’s lucky enough to even get some it seems? I jest, he loves his job but he also has, in his own words, another “great job”. The family man is now a grandparent (congratulations!), an avid “yogi” and he loves wakeboarding, hence the inspiration for this issue’s front cover.
Equinix also restructured the top-level of the company in March as it announced adjustments to its organisational structure to globalise the company’s operating model, scale the business and address the growing opportunity for Equinix as a strategic platform on which customers architect their digital business.
The global interconnection and data centre company repositioned three of its veteran leaders - Karl Strohmeyer, Sara Baack, and Eric Schwartz - into new roles as the company strives to become an even more customer-centric outfit. They were promoted to chief customer and revenue officer, chief product officer, and chief strategy and development officer respectively, with the new roles becoming effective from early Q2.
The C-level reshuffle comes “to address the growing opportunity for Equinix as a strategic platform on which customers architect their digital business”. But “we’re a rapidly growing company so we’ll continue to add the talent we need to execute on our strategy to stay ahead of the curve,” reveals Meyers, as Equinix starts a search for a chief technology officer (CTO) to join its ranks. “We’re actively evaluating candidates for the role and you may see an appointment in the coming quarters.”
The future is bright for Equinix as it edges itself even further ahead of its competition.
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